A look at the San Juan Island EMS budget | Update

San Juan Island Emergency Medical Services staff say finances will break even in 2018. According to staff, EMS is saving enough for capital investments, for items like equipment, and are expecting additional revenue, which was secured after the budget was passed last fall.

Budget breakdown

In 2018, EMS staff budgeted to collect $1,485,500 from the EMS property tax levy; $419,000 from billed ground ambulance services; $98,000 from the hospital district reimbursement; $10,000 from the Medicaid cost reimbursement grant; $41,000 from fees collected for department programs and trainings; $15,000 from other grants; and $9,000 from additional revenue.

The total budgeted collection is $2,077,500.

At the same time, the department staff budgeted to spend $971,776 on salaries and wages; $122,700 on payroll taxes; $252,520 on personnel benefits; $583,200 on non-personnel operating expenses; $35,000 on capital equipment; and $116,326 on principal and interest payments on debt.

The total budgeted to spend is $2,081,522.

Department staff has about $650,000 in cash and reserves at the start of this year from money left over from 2017.

Capital investments

Previously, Bill Williams, a former San Juan County Public Hospital District 1 commissioner, said he questioned the sustainability of the 2018 EMS budget. Staff, he said, was not saving the $100,000 a year necessary for the department’s capital expenses over the next decade, for such items as ambulances.

The hospital district oversees EMS finances and Williams resigned on Jan. 24 for undisclosed reasons.

Chris Compton, the EMS contracted accountant, agreed that the department’s goal is to set aside about $100,000 a year, and that amount has not been saved, annually, since he started to work with EMS in 2016.

However, he expects that the actual funds spent on the capital expenses over the next decade will likely be between $75,000 to $100,000, annually. EMS budgets, he explained, include contingency money that, if not spent, is rolled over into the following year.

Compton said the department ended 2017 with about $75,000 more than expected in cash and reserves, for a total of around $650,000.

“That’s a healthy balance,” he said. “Could we be in better shape? Sure. Are we in a dire situation, where one bad thing sinks the agency? No.”

He explained that the total is the equivalent to about four months of department expenses. According to Municipal Research and Services Center, a nonprofit that provides legal guidance to local governments, typically, there should be no less than two months worth of operating expenses in a government department’s savings. Corporations, explained Compton, typically have higher cash and reserves than government agencies backed by taxpayers’ funds.

The agency’s new financial footing has quelled many trepidations Compton had about the budget before the books closed for the year. At a previous public meeting, he said the department’s reserve was “extremely tight.” Compton added that additional grant money will be received this year, which was confirmed after the 2018 budget was approved last October.

According to the 2018 EMS budget, staff spent $195,000 in 2017 in capital investments, including $160,000 to replace a 24-year-old ambulance. They plan to spend $35,000 in 2018, $190,000 in 2019, and $25,000 in 2020 in capital investments.

Next year, projects include adding keycard access to the EMS building for $20,000. In 2019, they plan to replace a 10-year-old paramedics car for $30,000 and purchase defibrillators, which help during cardiac arrests, for $240,000. They expect to receive a grant to cover 50 percent of the defibrillators’ price.

Financial history

The current financial standing falls on the heels of a time that Monica Harrington, a former San Juan County Public Hospital District 1 commissioner, called “bad financial management.” Harrington resigned on Jan. 25 because she moved off the island for a new career.

This period of alleged poor financial management was prior to when she and Williams joined the board and Jerry Martin became San Juans Island EMS chief. Commissioners Michael Edwards and Mark Schwinge were on the hospital district board at this time.

According to Pam Hutchins, the hospital district superintendent, a financial consultant was hired in 2015 to analyze the budget and streamline the format. The consultant recommended EMS hire a local CPA to assist with the budget regularly. The “analysis helped [department staff] see that future budgets would be tight [and] the tax levy rate would need to be increased,” said Hutchins.

The EMS tax levy was increased in 2016, the same year Harrington and Williams joined the board and about a year after the consultant was hired.

On the same day Williams resigned, Martin rescinded his previously given resignation that he said was made for personal reasons. Compton and Martin have handled the department’s finances since 2016.

Before departing, Harrington said that prior to Compton and Martin taking charge of finances, no one was ensuring that the money in the department’s accounts receivable was actually collectible. Martin said he was not privy to prior EMS staff’s bookkeeping so he cannot confirm what caused the discrepancies.

Compton said, although he wasn’t working with EMS at that time, he investigated the department’s accounts receivables when he joined. He said a previous billing company kept accounts open for too long, and they have since closed them all and staff has collected more money than initially expected. He said that EMS staff never reported that the full amount of open accounts would ever be collectible.

Prior to 2016, EMS revenue also took a dip when local property values fell. As a result, the EMS levy lost $228,456.62 in revenue from 2011 to 2016, according to the San Juan County Auditor’s Office.

There were expenditures in 2017, partly resulting from actions that occurred prior to Compton and Martin’s tenure as well. This includes roughly $27,314 for Medicaid and Medicare reimbursements and about $16,500 for Island Air memberships refunds.

Compton said that when analyzing the outstanding accounts with the previous billing company, staff discovered 11 insurance providers, including Medicaid, Medicare and Kaiser Permanente Health Care, were overcharged and were reimbursed.

Island Air memberships were reimbursed after the company chose to separate from EMS in 2016, so EMS staff discontinued the membership program through the department. Island Air Owner Jackie Hamilton said her company was contracted with EMS for about eight years.

Legal services also cost EMS staff about $260,000 since 2016, partly to cover attorneys fees for an investigation by the Washington Attorney General’s Office. According to a 25-page document that the attorney general’s office submitted to the department in 2015, the office is looking into potential Medicaid fraud involving the former EMS air ambulance services.

Martin said he does not know when the investigation will conclude, but department staff have a meeting with the attorney general’s office in February. Staff budgeted to pay $20,000 in 2018 to their attorneys.

Review the 2018 EMS budget at www.sanjuanems.org.